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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (102211)	9/19/2009 3:56:26 PM
From: Elroy Jetson	Respond to of 116555

That's hardly a surprise. People with high credit scores are good at making smart financial decisions. People with low credit scores are more likely to make decisions based on emotion. The more underwater a mortgage is, the less likely a smart person will keep paying. One option I suggested to my friends was to buy the $200k home across the street, then default on their own $200k home with the $340k mortgage. To me it's business. That's why lenders want a 30% to 50% down-payment on commercial property - because in hard times that's likely going to be just a business decision. In their situation you have to ask what is worth more, $140k or a pretty credit score over the next five years. The loan modification made it easy for them to remain in their underwater home. .

To: mishedlo who wrote (102211)	9/19/2009 8:19:37 PM
From: SouthFloridaGuy	Read Replies (2) \| Respond to of 116555

Mish, a very good buy side bank analyst I speak to believes that "Strategic Defaults" will begin to fall if house prices have troughed - which appears to be the case - at least regionally. People are less incentivized to walk away if they believe house prices will begin to rise and/or they see it first hand. That's why the bull case has a lot of merit here, especially for the financials which are seriously over-capitalized if recent economic strength continues as tepid as it may be.